Defense Budget

The Defense Department's (DOD) single largest appropriation group--Operation and Maintenance (O&M)--funds training, maintenance, and other key readiness activities as well as other expenses not directly related to readiness. Congress has provided about $104 billion for all these activities in fiscal year 2000. Congress has raised concerns about the extent to which the funds that directly affect readiness--generally those in the operating forces' portion of the O&M budget--have been reduced to pay for other O&M expenses. This report (1) identifies the aggregated differences between the amounts that Congress initially designated for O&M subactivities (especially the readiness-related subactivities) and those DOD reported as obligated for the same subactivities, (2) identifies those O&M subactivities for which DOD obligated funds differently than recommended by Congress in each year of the five-year periods GAO examined (1994 through 1998), and (3) assesses the information available to Congress to track DOD's movement of funds among O&M subactivities.

GAO noted that: (1) from FY 1994 through 1998, DOD changed funding amounts for the 245 O&M subactivities by almost $43 billion compared with the amounts Congress originally designated for them; (2) these changes included both decreases and increases to the amounts designated by Congress; (3) DOD moved almost $16 billion out of and $27 billion into O&M subactivities; (4) every year from fiscal year 1994 through 1998 DOD obligated a different amount than Congress designated for the same 63 subactivities; (5) in total, DOD moved about $19 billion out of or into these subactivities; (6) in recent years DOD has improved the information it gives to Congress on the movement of O&M funds; (7) but this budget information is still incomplete and does not provide adequate details of where funds are moved and why; (8) changes in the way DOD presents budget justification materials, as well as congressionally mandated changes in the level of details to be provided by DOD, have improved DOD's budget information available to Congress; (9) in particular, the high-priority readiness-related transfer reports offer the most information available on why DOD moves funds among selected subactivities; (10) however, the statutory requirement for these reports will expire when DOD submits its FY 2000 report; (11) in addition, from fiscal years 1994 through 1998, little information was available to Congress about what DOD terms "fact-of-life" movements, which DOD says are made to reflect changes that occur between the time DOD formulates its budget request and the time Congress passes the appropriation act; (12) DOD reported over $1 billion in fact-of-life adjustments to its FY 1999 O&M appropriations; (13) DOD's financial management regulation does not define these adjustments and provides no guidance on when it is appropriate to make such adjustments, who should approve them, or how much funding can be moved; and (14) without any such guidance governing these movements, DOD and Congress cannot evaluate whether the movements of funds are appropriate.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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